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Why did I net get approved for auto loan?
I applied for an auto loan and was not approved. I have a credit score of 742 on equifax according to credit karma (equifax score is the score the credit union told me they looked at) but yea they said it came back as showing my score being 603 and i was denied because i need a minimum of 700 for them to approve me. I figured maybe they had some information placed in wrong for me but when i signed into credit karma after the application i saw that i had a new credit inquiry from the credit union. Therefore i know they did look at my credit. Why are they saying mine is so low? I currently have a lease under my name where i pay $224 a month and my annual income is 35k so i was thinking maybe its due to my debt income ratio. Anyone have any insight as to what it may be?

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Helpful to 10 out of 12 people

Try a different lender and watch your FICO scores, those are the scores that most auto lenders will use. Do some reading on how to build your credit as well. With a 603, you may have to deal with a dealership that works with poor credit or advertises to finance all credit situations.

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Scores fluctuate all the time.

Helpful to 10 out of 14 people

The score you see here on CK will not be the same score you would get if you went directly to Equifax.  There are other factors that are taken into consideration depending on the type of loan and the lender as well.  Your probably right, it most likely had to do with ratios. 

Good luck

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Multiple Factors

Helpful to 5 out of 7 people

I've learned that not only are there three different bureaus for credit, each with their own model, but there are also Multiple Versions of Each Bureau! Equifax, for example, recently released their 9.0 version. Some lenders will still pull the 5.0 version, and there can be 50-100 points difference in the score.

About your question on DTI (debt to income) ratio - That will be an important factor. If you have maxed out credit cards, or multiple home loans for example, you could be out of line on DTI. The other thing to look at is PTI (payment to income ratio) - This is the percentage of your income that is being spent on your auto loan. Generally, lenders prefer under 10%, some go up to 18%. It is the banks way of making sure youre not getting in over your head.

Lastly, you have to consider the structure of the loan itself. Most banks lend off of NADA clean trade value. They can lend up to 120-130% of this value for high credit customer, but they really prefer about 90-100%. (Some credit unions lend off of clean retail). Getting this percent in line can be crucial, and can be tough once you add your states taxes and fees. For your best result, be sure to pay down any credit cards/loans that you can a month ahead of going car shopping, and then do your homework. Any dealership should be able to show you an NADA on the car youre considering. If they are priced under Clean Trade, youre getting a good deal. If you can add 10-20% downpayment, you may even get a break in the rate! This is getting to be more important as auto loan rates continue to rise, even on top tier credit customers.

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Denied Loan

Helpful to 4 out of 5 people

You need to check all 3 credit reports, the loan consultant might have checked one of them that has errors on your credit file; you can then dispute any errors and get your credit score fixed/   NOt knowing any other personal financial information about you other than your income, depending on what amount of payment that you were applying for, your income might indeed be too low for qualifying (debt payment to income ratio).   you need to get your free annual credit scores:  you can do it over the phone and it takes approx 5-10 minutes   

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